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Mobile Phones - China - January 2016

“To stand out and attract purchases in China’s saturated mobile phone market, brands need to dedicate themselves to satisfying consumers’ unmet needs, building premium brand perceptions and differentiating brand identities.”

– Terra Xu, Senior Research Analyst

This report looks at the following issues:

  • Is the smartphone market saturated in China?
  • Satisfying unmet needs
  • Building a premium brand
  • Differentiating brand identities

Consumers are shortening the purchasing cycle of buying smartphones. Brand loyalty, however, is relatively low among Android phone users. This may be a result of the lack of differentiation between different Android phone brands, in terms of perceived performance on different aspects as well as brand associations.

To drive business growth, companies and brands need to focus on satisfying consumers’ unmet needs, building premium brand images and differentiating their brand identities.

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Table of contents

  1. Overview

    • What you need to know
      • Products/themes covered in this report
        • Demographic classification
          • Household income
          • Executive Summary

              • The market
                • Market overview
                  • Figure 1: Mobile phone volume sales, China, 2010-20
                • Market factors
                    • Figure 2: Mobile phone volume sales, by non-smartphones and smartphones, 2008-15
                  • Companies and brands
                    • Xiaomi, Huawei, Meizu, OPPO and Vivo enjoy growth in volume share
                      • Samsung, Lenovo and Coolpad’s volume share dropped
                        • Figure 3: Leading mobile phone brands in China, by volume share, 2014 and 2015
                      • Apple continues to top value share, followed by OPPO and Huawei
                        • Innovation highlights
                          • The consumer
                            • Domestic brands have taken the share of international brands
                              • Figure 4: Brand of current smartphone, October 2014 and 2015
                            • User profile of leading brands
                              • Apple achieves highest user satisfaction
                                • Processing speed is main concern for Android phones
                                  • Figure 5: Satisfaction with different aspects of current smartphones, by brand, October 2015
                                • Apart from OPPO, Android phone brands lack differentiation
                                  • Figure 6: Correspondence analysis – Smartphone brand association, October 2015
                                • Average purchasing cycle of smartphones is 1 to 1.5 years
                                  • Figure 7: Total usage time of current smartphone, October 2015
                                • Apple remains the most desired brand while domestic brands catch up
                                  • Figure 8: Purchase intention of smartphone brands in the next six months, October 2014 and 2015
                                • Apple enjoys the highest brand loyalty
                                  • What we think
                                  • Issues and Insights

                                    • Is the smartphone market saturated in China?
                                      • The facts
                                        • The implications
                                          • Satisfying unmet needs
                                            • The facts
                                              • The implications
                                                • Building a premium brand
                                                  • The facts
                                                    • The implications
                                                      • Figure 9: Huawei flagship store in Shanghai, December 2015
                                                    • Differentiating brand identities
                                                      • The facts
                                                        • The implications
                                                        • The Market – What You Need to Know

                                                          • Growth of China’s mobile phone market slows down
                                                            • Mobile phone market is expected to revive in the next five years
                                                              • Saturating penetration, unclear future of operator subsidies and low brand loyalty among Android phone users are market challenges
                                                                • Smartphones continue to dominate, but growth slows down
                                                                • Market Size and Forecast

                                                                  • Growth of China’s mobile phone market slows down
                                                                    • Figure 10: Mobile phone sales in China, by volume, 2008-15
                                                                    • Figure 11: Mobile phone sales in China, by value, 2011-15
                                                                  • Mobile phone market is expected to revive in the next five years
                                                                    • Figure 12: Mobile phone volume sales, China, 2010-20
                                                                • Market Factors

                                                                  • Market drivers
                                                                    • Continuous development of 4G network
                                                                      • Figure 13: 2G, 3G and 4G-capable mobile phones sales, by volume share, 2009-15
                                                                    • Shortening purchasing cycle of smartphones
                                                                      • Booming online retailing channels to boost sale volume
                                                                        • Smartphone models within various price ranges available
                                                                          • Market challenges
                                                                            • Penetration of smartphones saturating
                                                                              • Unclear future of operator subsidies
                                                                                • Fierce price competition due to low brand loyalty among Android smartphone users
                                                                                • Market Segmentation

                                                                                  • Smartphones continue to dominate while non-smartphones decline
                                                                                    • Smartphone growth slowing down
                                                                                      • Figure 14: Mobile phone volume, by non-smartphones and smartphones, 2008-15
                                                                                  • Key Players – What You Need to Know

                                                                                    • Xiaomi, Huawei, Meizu, OPPO and Vivo enjoy growth in volume share
                                                                                      • Samsung, Lenovo and Coolpad witnessed drop in volume share
                                                                                        • Apple continues to top value share, followed by OPPO and Huawei
                                                                                          • Domestic brands offering full price models
                                                                                            • OPPO and Vivo sponsoring popular TV shows and leveraging the power of celebrities
                                                                                              • Focus on both online and offline channels
                                                                                                • Developing overseas emerging markets
                                                                                                  • Innovation in functions, feature phones, cross-industry co-operation, smartphone loan and leasing and children’s phones
                                                                                                  • Market Share

                                                                                                      • Xiaomi, Huawei, Meizu, OPPO and Vivo enjoy growth in volume share
                                                                                                        • Samsung, Lenovo and Coolpad see drop in volume share
                                                                                                          • Figure 15: Leading mobile phone brands in China, by market volume share, 2014-15
                                                                                                        • Apple continues to top value share, followed by OPPO and Huawei
                                                                                                          • Figure 16: Leading mobile phone brands in China, by market value share, 2014-15
                                                                                                      • Competitive Strategies

                                                                                                        • Domestic brands offering full price models
                                                                                                            • Figure 17: Examples of smartphone models across different price ranges, by key domestic brands, 2015
                                                                                                          • OPPO and Vivo sponsoring popular TV shows and leveraging the power of celebrities
                                                                                                            • Focus on both online and offline channels
                                                                                                              • Developing overseas emerging markets
                                                                                                              • Who’s Innovating?

                                                                                                                • Innovations in mobile phone functions
                                                                                                                  • Germ-free phone
                                                                                                                    • Phone of my own
                                                                                                                      • A moral brand
                                                                                                                        • Feature phones strike back
                                                                                                                          • Cross-industry co-operation
                                                                                                                            • A local phone
                                                                                                                              • Pepsi phone
                                                                                                                                • Premium products to be available to more consumers
                                                                                                                                  • Loans for phones
                                                                                                                                    • Leased phone
                                                                                                                                      • Children’s phones
                                                                                                                                      • The Consumer – What You Need to Know

                                                                                                                                        • Domestic brands cannibalised the share of international brands
                                                                                                                                          • Lenovo, Samsung and Huawei attract more older consumers, while OPPO, Xiaomi and Meizu attract more young users
                                                                                                                                            • OPPO attracts consumers in lower tier cities and with lower incomes
                                                                                                                                              • Apple achieves highest user satisfaction, while Lenovo is yet to improve
                                                                                                                                                • Apple should better promote advantages, while processing speed is the area to be prioritised for Samsung, Huawei and Xiaomi
                                                                                                                                                  • Android brand associations lack differentiation, except for OPPO being closely related to “feminine”
                                                                                                                                                    • Average purchasing cycle of smartphones is 1 to 1.5 years
                                                                                                                                                      • Apple remains the most desired brand while domestic brands catch up
                                                                                                                                                        • Apple enjoys the highest brand loyalty
                                                                                                                                                        • Smartphone Brand Penetration

                                                                                                                                                          • Domestic brands have taken the share from international brands
                                                                                                                                                            • Figure 18: International versus domestic brands of current smartphone, October 2014 and 2015
                                                                                                                                                            • Figure 19: International versus domestic brands of current smartphone, by income and city tier, October 2015
                                                                                                                                                          • Penetration of Huawei and Xiaomi rose while Samsung dropped
                                                                                                                                                            • Figure 20: Brand of current smartphone, October 2014 and 2015
                                                                                                                                                          • User profile analysis of leading smartphone brands
                                                                                                                                                            • Lenovo, Samsung and Huawei appeal more to older consumers
                                                                                                                                                              • OPPO’s users are skewed to young females, while Xiaomi and Meizu attract young males
                                                                                                                                                                • Figure 21: User profile of leading smartphone brands, by age and gender, October 2015
                                                                                                                                                              • Apple, Samsung and Huawei attract more sophisticated consumers
                                                                                                                                                                • OPPO’s users are skewed to those living in lower tier cities and with lower incomes
                                                                                                                                                                  • Figure 22: User profile of leading smartphone brands, by city tier and income, October 2015
                                                                                                                                                              • Satisfaction with Current Smartphone

                                                                                                                                                                • Apple achieves highest user satisfaction
                                                                                                                                                                  • Figure 23: Overall satisfaction with current smartphone, by brand, October 2015
                                                                                                                                                                • Consumers’ key concerns are standby time and storage space
                                                                                                                                                                  • Apple stands out in most aspects
                                                                                                                                                                    • Among Android phones, Meizu outperforms in storage space
                                                                                                                                                                      • Lenovo is yet to improve satisfaction
                                                                                                                                                                        • Figure 24: Satisfaction with different aspects of current smartphones, by brand, October 2015
                                                                                                                                                                    • Key Satisfaction Drivers for Leading Brands

                                                                                                                                                                      • Apple to maintain and better promote competitive advantage
                                                                                                                                                                        • Figure 25: Key drivers of overall satisfaction for Apple smartphone, October 2015
                                                                                                                                                                      • Processing speed is the area to be prioritised for Android phones
                                                                                                                                                                        • Samsung should prioritise performance of speed related aspects
                                                                                                                                                                          • Figure 26: Key drivers of overall satisfaction for Samsung smartphone, October 2015
                                                                                                                                                                        • Storage space is the area to improve for Huawei
                                                                                                                                                                          • Figure 27: Key drivers of overall satisfaction for Huawei smartphone, October 2015
                                                                                                                                                                        • Improving internet speed and security features are priorities for Xiaomi
                                                                                                                                                                          • Figure 28: Key drivers of overall satisfaction with Xiaomi smartphone, October 2015
                                                                                                                                                                      • Smartphone Brand Association

                                                                                                                                                                        • Apple is associated with being desirable, stylish and a standard-setter
                                                                                                                                                                          • Samsung is associated with being innovative, a standard-setter and trustworthy
                                                                                                                                                                            • Xiaomi is associated with being vibrant and user-friendly
                                                                                                                                                                              • Huawei is associated with being sophisticated
                                                                                                                                                                                • Lenovo is associated with being good value for money and low profile
                                                                                                                                                                                  • OPPO is associated with being feminine
                                                                                                                                                                                    • Figure 29: Correspondence analysis – smartphone brand association, October 2015
                                                                                                                                                                                • Usage Time and Purchasing Cycle of Smartphones

                                                                                                                                                                                  • Average usage time of current smartphones is about 1 year
                                                                                                                                                                                    • Figure 30: Total usage time of current smartphone, October 2015
                                                                                                                                                                                  • Males and young consumers show strong purchase intention in the next six months
                                                                                                                                                                                    • Figure 31: Purchase intention in the next six months, by demographics, October 2015
                                                                                                                                                                                  • Average purchasing cycle of smartphones is 1 to 1.5 years
                                                                                                                                                                                    • Figure 32: Purchase intention, by usage time of current smartphones, October 2015
                                                                                                                                                                                  • Apple remains the most desired brand while domestic brands catch up
                                                                                                                                                                                    • Figure 33: Purchase intention of smartphone brands in the next 6 months, October 2014 and 2015
                                                                                                                                                                                  • Apple enjoys the highest brand loyalty
                                                                                                                                                                                    • Figure 34: Loyal users of leading brands, October 2015
                                                                                                                                                                                • Meet the Mintropolitans

                                                                                                                                                                                  • Mintropolitans prefer international brands
                                                                                                                                                                                    • Figure 35: International versus domestic brands of current smartphone, by consumer classification, October 2015
                                                                                                                                                                                    • Figure 36: Purchase intention of smartphone brands in the next six months, by consumer classification, October 2015
                                                                                                                                                                                  • Mintropolitans prefer Huawei among domestic brands
                                                                                                                                                                                    • Figure 37: Key domestic brands of current smartphone and future purchase, by consumer classification, October 2015
                                                                                                                                                                                  • Mintropolitans have shorter smartphone purchasing cycle
                                                                                                                                                                                    • Figure 38: Smartphone purchase intention in the next six months and total usage time of current smartphone, by consumer classification, October 2015
                                                                                                                                                                                • Appendix – Market Size and Forecast

                                                                                                                                                                                    • Figure 39: Total China mobile phone market, by market volume, 2010-20
                                                                                                                                                                                    • Figure 40: Total China mobile phone market, by value sales, 2011-15
                                                                                                                                                                                • Appendix – Market Segmentation

                                                                                                                                                                                    • Figure 41: China mobile phone market volume, by market segment, 2010-15
                                                                                                                                                                                • Appendix – Methodology and Abbreviations

                                                                                                                                                                                  • Methodology
                                                                                                                                                                                    • Fan chart forecast
                                                                                                                                                                                      • Consumer research
                                                                                                                                                                                        • Key driver analysis
                                                                                                                                                                                          • Methodology
                                                                                                                                                                                            • Key satisfaction drivers for leading brands
                                                                                                                                                                                              • Figure 42: Key drivers of overall satisfaction with Apple smartphone, Oct 2015
                                                                                                                                                                                              • Figure 43: Key drivers of overall satisfaction with Samsung smartphone, Oct 2015
                                                                                                                                                                                              • Figure 44: Key drivers of overall satisfaction with Huawei smartphone, Oct 2015
                                                                                                                                                                                              • Figure 45: Key drivers of overall satisfaction with Xiaomi smartphone, Oct 2015
                                                                                                                                                                                              • Figure 46: Overall satisfaction with current smartphone- Key driver output, Oct 2015
                                                                                                                                                                                            • Interpretation of results
                                                                                                                                                                                              • Figure 47: overall satisfaction with current smartphone- Key driver output, Oct 2015
                                                                                                                                                                                              • Figure 48: Satisfaction with different aspects of smartphone, Oct 2015
                                                                                                                                                                                            • Correspondence analysis
                                                                                                                                                                                              • Methodology
                                                                                                                                                                                                • Smartphone brand association
                                                                                                                                                                                                  • Figure 49: Correspondence Analysis – Smartphone brand association, October 2015
                                                                                                                                                                                                  • Figure 50: Smartphone brand association, October 2015
                                                                                                                                                                                                • Mintropolitans
                                                                                                                                                                                                  • Why Mintropolitans?
                                                                                                                                                                                                    • Who are they?
                                                                                                                                                                                                      • Figure 51: Demographic profile of Mintropolitans vs Non-Mintropolitans, by gender, age and personal income
                                                                                                                                                                                                      • Figure 52: Demographic profile of Mintropolitans vs Non-Mintropolitans, by marital status, city tier and education level
                                                                                                                                                                                                    • Abbreviations

                                                                                                                                                                                                    Companies Covered

                                                                                                                                                                                                    To learn more about the companies covered in this report please contact us.

                                                                                                                                                                                                    Mobile Phones - China - January 2016

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